DTs small money thread

[DionysusToast]

All

Seems that there is some debate regarding the effectiveness of SIM trading.

In my opinion - SIM trading is good for only 1 thing. That's getting used to a new trading platform, how the order entry works etc.

Some people would say SIM is useless, some would say SIM is useful. My opinion is that SIM is detrimental to your progress.

So - for the benefit of those without 6figure salaries - I thought we should have a 'small money thread'. The idea is to look at ways to trade live with small size.

To start off:

Instrument : ES
Tick Size : $12.50/contract
Commissions : @ $4/contract per round turn
Alternative Vehicle: SPY
Relationship to ES : 1 tick on the ES = 2.5 cent move on the SPY
Commissions : $2 per 100 shares round turn (less as you increse)

So - the idea is you can watch the ES, you can watch ES tape, you can watch ES time and sales, all charting can be ES. You just trade SPY instead. You multiply your ES stops and targets by 2.5 and start off with 100 shares.

10 tick loss on the ES = $125 + $4 commissions
25 cent loss on the SPY = $25 + $2 commissions (100 shares)

Of course for this you need a PDT account, unless you plan to do just a few R/Ts a day and just a few days a week.

You can also do less shares but you need to understand that commissions as a percentage of profit will increase. You need to account for that in analysing your results. It may be that a losing system is actually only losing because you are trading 1 share and so commissions are relatively large. So focus on cents gained.

I am sure we can cover a lot of instruments here - Euro, Dax, YM, currencies etc. etc with a variety of different ways to play them - ETFs, CFDs, SB etc.

Obviously SB won't be an option for shorter term players but the ETF SPY is fine.

Anyone else?

DT

 

[kimo'sabby]

DT,

For any person to make a trade, a trade that has just as good a chance as any other, what is the minimum amount of information that they need?

 

[gamma]

For any person to make a trade, a trade that has just as good a chance as any other, what is the minimum amount of information that they need?

Is that a question from a coach trainer?

Or is it a invitation to post answers, that the coach trainer can then comment on, telling us where we are going wrong?

 

[kimo'sabby]

Is that a question from a coach trainer?

Or is it a invitation to post answers, that the coach trainer can then comment on, telling us where we are going wrong?

It's a genuine question that is applicable to the thread my dearest westhighland terrier.

 

[DionysusToast]

DT,

For any person to make a trade, a trade that has just as good a chance as any other, what is the minimum amount of information that they need?

blimey, that's a bit of a deep question isn't it?

I would imagine that to take a trade that has as good a chance as any other, then no information at all is needed. A coin toss would do.

Now - to take a trade that has less chance of making money than any other - that takes a different set of skills entirely. These skills would best be described as 'chasing the market'. In fact, I would imagine that a consistent 'chase the market' strategy could quite easily lead to 70-80% loss rate.

 

[kimo'sabby]

blimey, that's a bit of a deep question isn't it?

I would imagine that to take a trade that has as good a chance as any other, then no information at all is needed. A coin toss would do.

Now - to take a trade that has less chance of making money than any other - that takes a different set of skills entirely. These skills would best be described as 'chasing the market'. In fact, I would imagine that a consistent 'chase the market' strategy could quite easily lead to 70-80% loss rate.

Don't be like that, there was a point to the question but it was lost in cynicism and sarcasm.

Carry on mate, lets have another lecture about lev2 and the ES.

Are you gonna be using an overhead projector by any chance? I may fall asleep.

 

[DionysusToast]

I have no idea what you are getting at Kimo.

"For any person to make a trade, a trade that has just as good a chance as any other, what is the minimum amount of information that they need? "

Perhaps you can either expand on the question or answer it yourself.

For any trade to have as much chance as any other trade, you toss a coin. That is the generic answer to a very generic question.

 

[timsk]

Hi DT,
I pretty much do as you outline, but trade the YM instead of SPY. I spend as much time - if not more - watching the ES than I do the YM. Although it's not correlated in the same way as SPY is to the ES, it's fine for my purposes. You know why I do this, but for other subscribers to the thread who don't - the reason is the fantastic liquidity that ES enjoys (relative to the YM) which makes it much more suitable for tracking the bid/ask delta. It may not qualify as a 'small money' alternative but, on the plus side, the YM is only $5.00 a contact per tick and, unlike day trading SPY, you don't have to have $25k for a PDT account.

The attached chart illustrates how I use the ES to trade the YM. It shows 2 windows, the left hand one shows the ES in the upper pane with the bid/ask volume breakdown in the lower pane. The right hand window shows the corresponding move in the YM. Unfortunately, I missed this actual trade (yesterday 26/05/11), but it illustrates the principle of looking at one instrument to get your cue to trade another. I hope the annotation is clear.
Tim.

 

[kimo'sabby]

blimey, that's a bit of a deep question isn't it?

I would imagine that to take a trade that has as good a chance as any other, then no information at all is needed. A coin toss would do.

Now - to take a trade that has less chance of making money than any other - that takes a different set of skills entirely. These skills would best be described as 'chasing the market'. In fact, I would imagine that a consistent 'chase the market' strategy could quite easily lead to 70-80% loss rate.

 

[redart]

I just trade with tiny stakes with spreadbetting - mainly cable, euro and the ES.
I use the actual futures contracts for my analysis. In the past, I would put my stop at a higher high of a particular candle for example, and then get stopped - but then I check the futures contract, and a new high wasn't made and I wouldn't have been stopped if I was trading the actual futures contract. So now I put my stop in on a sim futures account and when I hear it get stopped, I close my SB position, lol

All just a bit of fun for me, though. I'd like to see you trade though, DT. Maybe a chatzy room where we can all trade an instrument live, say the Euro, at some point in the future for a little while? We get to see a pro in action, and you can giggle at my entries... (not todays entires though, I've done ok on teh euro today )

 

[HowardCohodas]

All

Seems that there is some debate regarding the effectiveness of SIM trading.

In my opinion - SIM trading is good for only 1 thing. That's getting used to a new trading platform, how the order entry works etc.

Some people would say SIM is useless, some would say SIM is useful. My opinion is that SIM is detrimental to your progress.

<snip>

Anyone else?

DT

I'm assuming by SIM you are referring to what I call paper trading. If that is the case, it is certainly useful to learning a new platform. I think that it is also useful for working out most of the logistics of entering, managing and exiting a trade for a strategy new to the trader. The trader can get fooled by fill timing and prices. It is also useful for teaching the trader the rhythm and time requirements for a strategy new to him.

However, I don't quite understand your point regarding it being detrimental to a traders progress. Please elaborate.

Small money trading is a crucial step on the way to serious money trading. I applaud this thread for exploring this subject.

 

[DashRiprock]

i fink pwetend twading iz a vewy yousefull tule....

...(can't keep that up!)...

... if it's applied in proper ways. Alot of people don't have the discipline to trade on the simulator, they don't feel "involved" if the position isn't actually on - a bad omen if you ask me. Others build some sort of methodology on the simuator and then jump 100% into a funded account - often with disastrous effects.

 

[kimo'sabby]

i fink pwetend twading iz a vewy yousefull tule....

...(can't keep that up!)...

... if it's applied in proper ways. Alot of people don't have the discipline to trade on the simulator, they don't feel "involved" if the position isn't actually on - a bad omen if you ask me. Others build some sort of methodology on the simuator and then jump 100% into a funded account - often with disastrous effects.

There's almost an attitude of...'simulator, can't be bothered with that'.

Trading is a great hobby, but a sh!t job...unless you're salaried.

 

[DashRiprock]

prepare to be enlightened. let me put it like this:



........





trading on a simulator ain't ever gonna make you any money. It's actually an opportunity cost.



...........


But it can save you a fortune.


(now watch this drive)

 

[kimo'sabby]

prepare to be enlightened. let me put it like this:



........





trading on a simulator ain't ever gonna make you any money. It's actually an opportunity cost.



...........


But it can save you a fortune.


(now watch this drive)

Nice






































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